Introductory Business Law CLEP Prep Practice Exam

What type of contract requires that all involved parties perform for it to be binding?

1. Bilateral contract

2. Voidable contract

3. Executory contract

4. Unilateral contract

The correct answer is: Bilateral contract

A Bilateral contract is the correct answer because it is a type of contract where both parties are required to perform their respective obligations in order for it to be considered valid. This means that all involved parties must fulfill their promises and obligations stated in the contract for it to be binding. An Executory contract, on the other hand, is a type of contract where one or both parties have yet to fulfill their obligations. A Voidable contract is one that can be cancelled by one party due to certain circumstances, such as misrepresentation or undue influence. Lastly, a Unilateral contract is a type of contract where only one party is required to perform their obligations, such as in the case of a reward for finding a lost item. However, in this type of contract, the promise only becomes binding once the specific task is completed. Therefore, the other options are incorrect because they do not require all parties